Wednesday, 7 December 2016

Think and Grow Rich

Perhaps the biggest turning point for me as a trader was when I read the book "Think and Grow Rich" by Napoleon Hill. For those not familiar, this book was written way back in the 1930s following the American depression and was really one of the world's first "self help" books, going on to sell millions of copies worldwide. Originally intended to help Americans find a way out of the appalling economic mess caused by the Wall Street crash, which left millions of Americans homeless, penniless or in dire straights, it has become the grand-daddy of all self development books and is touted by all the big names in the self development field today as one of the key aids in their success. I know it was in turning me from a good trader into a wealthy trader.

The over-riding principle of this book is that the power lies within any person, no matter what their circumstances, to build the life that they want and achieve absolutely anything they put their mind too. In essence, by thinking in the right manner, you can become rich. Rich doesn't necessarily mean in monetary terms (although that is possible and a top reason why people are attracted to the book) but also rich in terms of every aspect in life: relationships, health, work etc. Most people attempt to find success by looking outwardly: to external factors such as other people and circumstances.Or they believe that they cannot change their own circumstances and use this is an excuse not to. I've written about this in recent posts but I believe that the main factor in how successful someone is as a trader has nothing to do with talent. It's about how much the person is willing to do to become successful. "Think and Grow Rich" really backs this up with a series of anecdotes about famous as well as ordinary, unknown people, who found success using the basic principles outlined by Napoleon Hill. Every one of them, whether consciously or unconsciously, adhere to the 4 main principles of success: Desire, Faith, Action and Persistence.

Hill states that you must possess not just desire for what you want to achieve but a BURNING desire. That might seem like a trivial difference but in reality there is a crucial difference. I think almost everyone who gets into trading has a desire to make a lot of money, be successful and/or do it professionally. But I can guarantee you that it is only the ones who have a BURNING desire who actually succeed. We all know the success rate in trading. The 5%. If we go by this figure, 95% of traders have desire to succeed. Which means the desire isn't strong enough. If it was, they WOULD be successful. No ifs, ands or buts. Well, that's not quite true actually. Because you also need to believe you can be successful.

I know traders who have that burning desire, usually because they are driven by their current circumstances not being good and really want to improve their life but deep down, they don't really believe they will succeed. They have a negative mindset. When that is the case, it usually means that the first sign of failure (and in trading, that is a 100% certainty to happen at some point) they give up. "Well, I didn't think I would be successful anyway and this loss just reinforces that, so why bother?". Every successful trader at first had to have faith that they would succeed. Not "might" or "maybe" but "definitely". It's OK to have doubts, perfectly natural that you will but you still have to believe for the majority of the time, that you will ride through the rough times and definitely get there eventually. I always knew I would be a successful trader. I didn't know at what point it would happen, I knew there would be setbacks and tough moments but I always had faith in myself and that it would all work out in the end.

This faith, twinned with desire, then makes it almost a certainty that you will be driven to action. This is the real meat of it all, where you make plans and get to work on them to produce the results you want. In trading terms, this is where you'll do your research, test strategies, analyse the market, read about psychology and dive deep into learning trading inside out. This can actually be a lot of fun and most of you reading this will have got to this stage. But unfortunately, most of you will be beaten by the 4th and final stage: persistence. In other words, you will give up.

Ladyboys (yes, they are!) - absolutely nothing to do with  sexual transmutation.

 Once the first bank is busted, most people never go back, too burnt by the experience. A sizeable proportion will refill the bank and give it a second shot but will eventually lose it again and give up. The number of returning traders gradually decreases until only a small band are left grinding it out. They might not lose any money but the majority of them will also give up, fed up of treading water or not getting the huge returns they desire. That just leaves a small but hardy band - the 5%. The ones who refuse to give up. The ones who always find a way to build that bank again for another shot, no matter how long it takes. The ones who never blame the market, or the software, or the players or other people in the industry. The ones who only say "How can I improve? How can I learn from my mistakes?". The ones who tweak their plans till they get the desired outcome. The ones who have absolute faith in themselves. The ones who have a burning desire to succeed. The ones who understand that they control their own destiny.

Of course, it's not as simple as just applying those 4 rules. Most of us have limiting beliefs in our subconscious (which I delved into in my previous post) which make it very tough to make headway with trading. Napoleon Hill talks about how this can be overcome and uses concepts which at the time were revolutionary but that today are widely used yet still often frowned upon as being "new age" or "woo-woo". I'm talking primarily about hypnosis and meditation (which he refers to as "auto-suggestion"). I consider the two inter-changeable and that it's actually visualisation that is the most important aspect of both. It's something I do every day and I can only speak from personal experience (although if you read about pretty much every well known successful person in the modern era, they almost all meditate/visualise regularly) but it does work. Hill even talks about sexual transmutation, which does seem at first a bit out-there but really makes sense when you break it down: stop wasting your time jacking off to porn/chasing women on Tinder and use that time and energy to achieve something meaningful! Nicola Tesla remained a virgin his entire life and look what he achieved! Might be a bit too extreme for most men, granted!

I was initially put onto this book by Mark Iverson, who mentioned on his blog what an important factor this was in his success. Unfortunately, I only skimmed through it, believing I was doing fine and some of the concepts inside were a bit too weird for my liking. A few years later, I came back to it, read it thoroughly and crucially with an open-mind and applied the concepts with absolute faith. My profits sky-rocketed. That's all you really need to know.